Business area Project Development
Business area Project Development, which comprises Housing Development and Property Development, creates sustainable and vibrant urban environments with both residential and commercial property. The business area is responsible for the Group’s property acquisitions and divestitures as well as project development which generates contract work for the other business areas. Project Development works through wholly owned projects or in collaboration with other partners in joint ventures.
Housing Development develops all kinds of housing such as apartment buildings in tenancy ownership, ownership and rental form as well as single homes.
Operations in Property Development revolve around the acquisition, development, maintenance and management as well as the divestiture of commercial property. In cases where no divestment is planned property may remain in the Group for a long period of time in order to generate rental and appreciation revenues or a combination of both.
Peab’s primary ambition is to work with development projects on our own balance sheet. Collaboration with other partners via joint ventures may take place from time to time during a project. The goal is to create capital efficient developments with partners that bolster business and profit generation.
Net sales and profit
July – September 2019
Net sales for the third quarter 2019 in business area Project Development amounted to SEK 1,715 million (1,878). Operating profit amounted to SEK 183 million (165).
January – September 2019
Net sales for the period January-September 2019 in business area Project Development amounted to SEK 5,646 million (5,940) and operating profit was SEK 732 million (540). The reduction in net sales stems from Housing Development. In Property Development Peab’s partially owned company Acturum divested a number of properties in the second quarter. The divestitures had a positive effect of SEK 170 million in profit contributions from partially owned companies.
Capital employed in Project Development at the end of the period amounted to SEK 15,787 million (12,509). The increase is due to investments in project and development properties, more ongoing housing projects in Finland and Norway, investments in rental projects as well as investments in operations and investment properties in Property Development. The increase also included additional IFRS 16, Leases per September 30, 2019 of SEK 336 million divided into SEK 111 million in operations properties, SEK 57 million in investment properties, SEK 171 million in project and development properties and SEK -3 million in other receivables.
Brf Blåeld
Linköping
Capital employed
| MSEK | 30 Sep 2019 | 30 Sep 2018 | 31 Dec 2018 | |
| Mkr | 30 sep 2019 | 30 sep 2018 | 31 dec 2018 | |
| Operations property | Driftsfastigheter | 1,267 | 1,147 | 915 |
| Investment property | Förvaltningsfastigheter | 705 | 973 | 589 |
| Project and development property | Projekt- och exploateringsfastigheter | 11,250 | 8,981 | 9,685 |
| of which housing development rights | varav bostadsbyggrätter | 5,792 | 5,662 | 5,394 |
| of which commercial development rights | varav kommersiella byggrätter | 615 | 645 | 656 |
| of which ongoing housing projects in Norway and Finland | varav pågående bostadsprojekt i Norge och Finland | 2,799 | 1,774 | 2,034 |
| of which ongoing rental projects in Sweden | varav pågående hyresrättsprojekt i Sverige | 954 | 366 | 925 |
| of which ongoing commercial projects | varav pågående kommersiella projekt | 476 | 232 | 302 |
| of which completed projects | varav färdigställda fastigheter | 244 | 10 | 14 |
| of which other | varav övrigt | 370 | 292 | 360 |
| Participation in joint ventures | Andelar i joint ventures | 1,849 | 980 | 1,019 |
| Loans to joint ventures | Utlåning till joint ventures | 1,032 | 1,429 | 1,466 |
| Working capital and other | Rörelsekapital och övrigt | -316 | -1,001 | -690 |
| Total | Summa | 15,787 | 12,509 | 12,984 |
Key ratios
| Jul-Sep 2019 | Jul-Sep 2018 | Jan-Sep 2019 | Jan-Sep 2018 | Oct-Sep 2018/2019 | Jan-Dec 2018 | ||
| Jul-sep 2019 | Jul-sep 2018 | Jan-sep 2019 | Jan-sep 2018 | Okt-sep 2018/2019 | Jan-dec 2018 | ||
| Net sales, MSEK | Nettoomsättning, Mkr | 1,715 | 1,878 | 5,646 | 5,940 | 7,550 | 7,844 |
| of which Property Development | varav Fastighetsutveckling | 180 | 217 | 607 | 544 | 801 | 738 |
| of which Housing Development | varav Bostadsutveckling | 1,535 | 1,661 | 5,039 | 5,396 | 6,749 | 7,106 |
| Operating profit, MSEK | Rörelseresultat, Mkr | 183 | 165 | 732 | 540 | 977 | 785 |
| of which Property Development | varav Fastighetsutveckling | 35 | 38 | 276 | 101 | 345 | 170 |
| of which Housing Development | varav Bostadsutveckling | 148 | 127 | 456 | 439 | 632 | 615 |
| Operating margin, % | Rörelsemarginal, % | 10.7 | 8.8 | 13.0 | 9.1 | 12.9 | 10.0 |
| of which Property Development | varav Fastighetsutveckling | 19.4 | 17.5 | 45.5 | 18.6 | 43.1 | 23.0 |
| of which Housing Development | varav Bostadsutveckling | 9.6 | 7.6 | 9.0 | 8.1 | 9.4 | 8.7 |
| Capital employed at the end of the period, MSEK | Sysselsatt kapital vid periodens utgång, Mkr | 15,787 | 12,509 | 15,787 | 12,509 | 15,787 | 12,984 |
| Orders received, MSEK | Orderingång, Mkr | 1,528 | 1,361 | 4,684 | 4,579 | 6,786 | 6,681 |
| Order backlog, MSEK | Orderstock, Mkr | 5,764 | 7,039 | 5,764 | 7,039 | 5,764 | 7,134 |
| Number of employees at the end of the period | Antal anställda vid periodens utgång | 340 | 377 | 340 | 377 | 340 | 379 |
Housing Development
July – September 2019
Net sales during the third quarter amounted to SEK 1,535 million (1,661). Operating profit increased to SEK 148 million (127) and the operating margin to 9.6 percent (7.6).
The number of start-ups of our own developed homes during the third quarter amounted to 522 units (475) and was divided among different places in all three countries. The number of sold homes was 695 (402), of which about half in Sweden.
January – September 2019
Net sales decreased to SEK 5,039 million (5,396) and the reduction is mainly related to Sweden. Operating profit amounted to SEK 456 million (439) and the operating margin amounted to 9.0 percent (8.1). Operating profit and the operating margin contracted in Sweden but was for the most part countered by more turned over projects in Norway and Finland. In the latest rolling 12 month period the operating margin amounted to 9.4 percent compared to 8.7 percent for the entire year of 2018.
The number of start-ups of our own developed homes amounted to 1,529 units (1,591) mainly divided between Sweden and Finland, with a good geographic spread in both countries. The number of sold homes was 1,954 (1,165), most of them sold in Sweden. Greater sales efforts in Stockholm led to higher sales during the period January-September compared to the same period 2018. The number of own developed homes in production has decreased and was 5,309 (6,105) the end of the period. The level of sold homes in production was 68 percent (64). The number of repurchased homes per September 30, 2019 was 169 (84) and around half of them were in Sweden and half of them in Finland. Peab develops and builds housing all over Sweden and in large parts of Norway and Finland. Our housing is primarily in the medium price segment and we see that there continues to be a considerable need for new production of housing in this range.
At the end of September 2019 the level of capital employed rose due to investments in project and development property along with rental projects in Sweden. The rental projects may be converted into tenant-owned housing or be sold on the investor market. The level of capital employed has also risen due to increased activity in our own developed housing projects in Norway and Finland, which remain on our balance sheet until they are finished. The diagram shows when in time the housing projects in Norway and Finland are expected to be completed. The total number of ongoing own housing developments in Norway and Finland were 1,540 (1,402) per September 30, 2019.
Development rights for housing
| Number, approx. | Sep 30 2019 | Sep 30 2018 | Dec 31 2018 | |
| Antal, cirka | 30 sep 2019 | 30 sep 2018 | 31 dec 2018 | |
| Development rights on our own balance sheet | Byggrätter i egen balansräkning | 20,200 | 22,000 | 21,300 |
| Development rights via joint ventures | Byggrätter via joint ventures | 5,200 | 5,600 | 5,000 |
| Development rights via options etc. | Byggrätter via optioner m.m. | 9,900 | 7,900 | 9,100 |
| Total | Totalt | 35,300 | 35,500 | 35,400 |
When in time ongoing housing projects in Norway and Finland will be completed
Own housing development construction
| Jul-Sep 2019 | Jul-Sep 2018 | Jan-Sep 2019 | Jan-Sep 2018 | Oct-Sep 2018/2019 | Jan-Dec 2018 | ||
| Jul-sep 2019 | Jul-sep 2018 | Jan-sep 2019 | Jan-sep 2018 | Okt-sep 2018/2019 | Jan-dec 2018 | ||
| Number of housing starts during the period | Antal under perioden produktionsstartade bostäder | 522 | 475 | 1,529 | 1,591 | 2,151 | 2,213 |
| Number of sold homes during the period | Antal under perioden sålda bostäder | 695 | 402 | 1,954 | 1,165 | 2,614 | 1,825 |
| Total number of homes under construction, at the end of the period | Totalt antal bostäder i produktion, vid periodens slut | 5,309 | 6,105 | 5,309 | 6,105 | 5,309 | 6,231 |
| Share of sold homes under construction, at the end of the period | Andel sålda bostäder i produktion, vid periodens slut | 68% | 64% | 68% | 64% | 68% | 63% |
| Number of repurchased homes in the balance sheet, at the end of the period | Antal återköpta bostäder i egen balansräkning, vid periodens slut | 169 | 84 | 169 | 84 | 169 | 104 |
Property development
Net sales and operating profit from operations are derived from acquisitions, development, maintaining and managing wholly owned property, shares in the result from partly owned companies as well as capital gains/losses from the divestiture of completed projects and shares in partly owned companies.
July – September 2019
During the third quarter 2019 net sales were SEK 180 million (217) and operating profit was SEK 35 million (38). No major property transactions have taken place during the quarter.
January – September 2019
During the period January-September 2019 net sales were SEK 607 million (544) and operating profit was SEK 276 million (101). Our partially owned companies continue to develop well and profit during the period from partially owned companies amounted to SEK 255 million (75), of which SEK 170 million refers to divestitures in Acturum. In December 2018 Acturum signed a contract with Fastator and Offentliga hus to sell all its remaining property with the transfer in the second quarter 2019. Acturum was founded by Peab and FAM – The Wallenberg Foundations’ holding company – as equal partners in 2013. The company acquired a property portfolio in Södertälje from AstraZeneca and has since then developed a number of properties. The divestitures had a positive effect of SEK 170 million in the second quarter in profit contributions from partially owned companies. No other major property transactions have taken place during the period.
In cases where no divestiture is planned properties can remain in the Group for a considerable length of time in order to garner rent and appreciation revenue or a combination of both. Capital employed in Property Development includes operations property for a recognized value of SEK 1,267 million (1,147), of which SEK 111 million is additional IFRS 16 Leases and SEK 705 million (973) is investment property, of which SEK 57 million is additional IFRS 16 Leases. The tables below show our major property projects per September 30, 2019.
Ultimes Business Garden
Helsinki
Property projects
| Completed projects | Location | Area in m2 | Degree rented, % | Recognized value, MSEK |
| Businesspark | Ängelholm | 62,800 | 95 | 242 |
| Businesspark | Ljungbyhed | 76,000 | 64 | 120 |
| Office building | Helsinki | 9,300 | 85 | 282 |
| Office building | Helsinki | 7,600 | 68 | 273 |
| Tenancy | Malmö | 4,600 | 100 | 141 |
| Office building | Sigtuna | 3,600 | 74 | 65 |
| Other completed projects | 104 | |||
| Total | 1,227 | |||
| of which operations property | 599 | |||
| of which investment property | 613 | |||
| of which project and development property | 15 |
| Ongoing projects | Location | Area in m2 | Degree rented, % | Recognized value, MSEK | Total investment at completion, MSEK | Timepoint of completion | Level of completion, % | ||
| Pågående projekt | Ort | Uthyrningsbar yta, m2 | Uthyrningsgrad, % | Bokfört värde, Mkr | Beslutad investering, Mkr | Tidpunkt färdigställande | Färdigställande-grad, % | ||
| Offices | Solna | Kontor | Solna | 12,400 | 100 | 415 | 449 | Q4-2019 | 92 |
| Retail and offices | Gothenburg | Handel och kontor | Göteborg | 6,400 | 98 | 151 | 171 | Q4-2019 | 88 |
| Retail | Oslo | Handel | Oslo | 3,600 | 100 | 135 | 190 | Q3-2020 | 71 |
| Office building | Malmö | Kontor | Malmö | 4,900 | 68 | 142 | 185 | Q1-2020 | 77 |
| Office building and parking | Solna | Kontor och parkering | Solna | 2,900 | 89 | 158 | 277 | Q2-2020 | 57 |
| Office building | Helsingborg | Kontor | Helsingborg | 4,500 | 100 | 35 | 117 | Q1-2021 | 30 |
| Other ongoing projects | Övriga pågående projekt | 32 | |||||||
| Total | Summa | 1,068 | |||||||
| of which operations property | varav driftsfastigheter | 557 | |||||||
| of which investment property | varav förvaltningsfastigheter | 35 | |||||||
| of which project and development property | varav projekt- och exploateringsfastigheter | 476 | |||||||
Significant joint ventures
Peab’s significant joint venture companies Fastighets AB Centur, Tornet Bostadsproduktion AB, Fastighets AB ML4 and Point Hyllie Holding AB are developing well and via them Peab has built up considerable indirect holdings in investment property and development property for both commercial and residential purposes. Ongoing returns are in the form of shares in the profit from joint ventures recognized in operating profit and interest income on lending. Changes in market values that effect booked values in joint venture companies are not reported in Peab’s profit.
Significant joint ventures
Fastighets AB Centur
Own, manage and develop commercial property and housing.
Peab’s share: 50 percent
Partner: Balder
Location: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties September 30, 2019 1): SEK 6,448 million (5,145)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 394 million (324)
Major ongoing projects: Hotel Forenom Varvsstaden, Malmö Rentable area 3,900 m2, Lyckholms Gothenburg, Rentable area 6,400 m2
Tornet Bostadsproduktion AB
Build and manage attractive and environmentally friendly rentals in larger cities in Sweden.
Peab’s share: 33 percent
Partner: Folksam and Balder
Location: Stockholm, the Mälardalen region, Gothenburg and the Öresund region
Recognized value on properties September 30, 2019 1): SEK 4,020 million (3,244)
Peab’s portion of unrecognized fair value exclusive tax 1): SEK 232 million (190)
Major ongoing projects: Munkebäck, Gothenburg Rentable area 10,900 m2, Kungsängen, Upplandsbro Rentable area 8,900 m2,, LP Parken, Gothenburg Rentable area 15,000 m2, Tallbohov, Järfälla Rentable area 10,500 m2 and several apartment building projects in Västerås and Helsingborg
Fastighets AB ML4
Own and manage the research facility Max IV. The facility is rented to Lund University.
Peab’s share: 50 percent
Partner: Wihlborgs
Location: Lund
Recognized value on properties September 30, 2019: SEK 1,837 million (1,852)
Major ongoing projects: Research building 6,400 m2
Point Hyllie Holding AB
Develop, own and manage the office property The Point as well as own and manage the hotel property Värdshuset 5 (Operator Quality Hotel View).
Peab’s share: 50 percent
Partner: Volito
Location: Hyllie, Malmö
Recognized value of properties September 30, 2019: SEK 1,240 million (940)
Major ongoing projects: 29 floor office building, The Point, Rentable area 20,000 m2
1) Valued at market price in joint venture companies. The market prices on properties that affect the recognized values in joint venture companies are not recognized in Peab’s profit.